As anticipated, Ontario Premier Kathleen Wynne
formally announced plans Monday morning to join Quebec
and California in building a cap-and-trade system for greenhouse
gas emissions. Calling climate change "one of the greatest
challenges mankind has faced", Ontario will soon impose
sector-specific limits on emissions. Once the details are finalized
over the next six months, the Province will sell or auction permits
to companies that represent the right to emit a stated volume of
pollution. Companies that pollute more than their limit must
purchase permits from other companies that plan to emit less. As
such, proponents of cap-and-trade argue that market forces
incentivize businesses to adopt cleaner and more efficient
practices. "The action we take today will help secure a
healthier environment, a more competitive economy and a better
future for our children and grandchildren," Wynne said.
Opponents of the system argue that cap-and-trade is simply a
carbon tax by another name. Increasing costs to businesses, they
argue, will invariably lead to consumers paying more for a wide
variety of goods and services. The University of California
Berkeley, for example, estimates that cap-and-trade will add 2.6
cents per litre to the price of gasoline in Ontario.
The government plans to reinvest the proceeds raised through
cap-and-trade into projects that reduce greenhouse gas emissions.
These include projects aimed at reducing household energy
consumption, building more public transit and assisting factories
and businesses in reducing their environmental footprint. Initial
estimates indicate that a cap-and-trade system in Ontario could
generate between $1 billion and $2 billion in revenue per year.
Despite the Premier's announcement, few details or dollar
figures were provided. Among other uncertainties, it remains
unclear how much the Province expects to raise by the sale or
auction of permits, what the costs of introducing the system will
be, how emission caps will be set, and what the effect on consumers
is expected to be.
Environment Minister Glen Murray stated that the government will
consult the public as it irons out the details for a cap-and-trade
regime by October. We will be sure to update this blog once more
details are revealed.
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Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
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